Etter v. Allstate Insurance Company et al

Filing 136

ORDER GRANTING 131 MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT. Signed by Judge William Alsup. (whalc2, COURT STAFF) (Filed on 5/30/2018)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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No. C 17-00184 WHA
Plaintiff,

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For the Northern District of California

United States District Court

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JOHN C. ETTER, individually and on behalf
of all others similarly situated

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v.
ORDER GRANTING
PRELIMINARY APPROVAL
OF CLASS SETTLEMENT

ALLSTATE INSURANCE COMPANY, et
al.,
Defendant.
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INTRODUCTION

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In this TCPA class action, plaintiff moves for preliminary approval of a proposed

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settlement agreement. The motion is GRANTED.
STATEMENT
The background of this action is set forth in prior orders (see, e.g., Dkt. No. 73). In

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short, this is a class action by plaintiff John Etter against defendants Allstate Insurance

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Company, Allstate Indemnity Company, Allstate Property and Casualty Insurance Company,

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Allstate Northbrook Indemnity Company, Allstate Insurance Company of California

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(collectively, “Allstate”), and Louis Odiase, an Allstate insurance agent. Etter asserted a single

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claim for violation of the Telephone Consumer Protection Act of 1991, as amended by the Junk

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Fax Prevention Act of 2005, based on allegations that defendants sent a single unsolicited

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facsimile advertisement to Etter on October 11, 2016, without his prior invitation or permission

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and without the legally-required opt-out notice language. Odiase works as an independent
contractor for Allstate and sent fax advertisements using fax broadcasters.

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On December 26, 2017, the Court certified the following class relating to the October
11, 2016 fax (Dkt. No. 73):

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Class B:

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All persons or entities successfully sent a facsimile on or about
October 11, 2016, stating, “potentially save 40–60% off your
Commercial auto insurance,” “fill out the form below” and “FAX
YOUR REQUEST TO: 510-234-0518, TEL [phone], OR
EMAIL: [e-mail],” and “If you wish to be
removed from our Fax list, please call 888-828-3086.”

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Plaintiff has now filed an unopposed motion for preliminary approval of a proposed
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class settlement (Dkt. Nos. 131, 133–34).
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ANALYSIS
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Torrisi v. Tuscon Elec. Power Co., 8 F.3d 1370, 1375 (9th Cir. 1993) (citation omitted).
For the Northern District of California

United States District Court

“A settlement should be approved if ‘it is fundamentally fair, adequate and reasonable.’”
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Preliminary approval is appropriate if “the proposed settlement appears to be the product of
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serious, informed, non-collusive negotiations, has no obvious deficiencies, does not improperly
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grant preferential treatment to class representatives or segments of the class, and falls within the
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range of possible approval.” In re Tableware Antitrust Litig., 484 F. Supp. 2d 1078, 1079 (N.D.
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Cal. 2007) (Chief Judge Vaughn Walker). Here, the proposed settlement agreement satisfies
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these requirements.
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1.

BENEFIT TO CLASS MEMBERS.

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The proposed settlement agreement establishes a gross settlement fund of $6,533,250
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(Dkt. No. 134-1 at 2). Lead counsel intend to seek up to 30 percent of the gross settlement fund
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($1,959,975) for attorney’s fees plus reasonable out-of-pocket expenses, as well as an incentive
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award of $7,500 for the lead plaintiff — all to be paid, to the extent approved, from the gross
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settlement fund (Dkt. No. 131 at 6). Additionally, the requested third-party settlement
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administrator estimates administrative costs will amount to $52,940, which would also be paid
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from the gross settlement fund (Dkt. No. 134-1 at ¶ 7). The net settlement fund remaining after
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these deductions (where one-half of the fee award will be paid only at the wrap-up of the fund
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administration) will then be distributed on a pro rata basis to class members, who will each
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receive a check in the mail (Dkt. No. 131 at 2).
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Any balance remaining after the initial distribution will be redistributed to other class

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members on a pro rata basis (Dkt. No. 134-1 ¶ 6). If the amount is less than $10 per class

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member, however, and thus “not economically feasible to redistribute,” the remainder will be

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paid as cy pres award to either the National Consumer Law Center (plaintiff’s preference) or the

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Consumer Federation of America (defendants’ preference), whichever non-profit organization

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the Court approves of (Dkt. Nos. 131 at 5, 134-1 ¶ 6).

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Under the proposed settlement agreement, plaintiff will recover a settlement fund based

No. 131 at 8). Since TCPA provides for statutory damages at $500 per fax (or recovery of the

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actual monetary loss, whichever is greater), plaintiff’s gross recovery represents 75 percent of

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For the Northern District of California

on gross recovery of $375 per fax, with each class member receiving their pro rata share (Dkt.

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United States District Court

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the best possible outcome the class could have obtained through litigation (see id. at 8–9). See

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47 U.S.C. 227(b)(3)(B). The difference between the maximum possible recovery and the gross

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settlement fund accounts for the risks and costs of litigation, including the risk that defendants’

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affirmative defense might prevail, the accrued fees and expenses of counsel, and the risks and

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costs of “inevitable appeals” (Dkt. No. 131 at 8). Given that this proposed settlement

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agreement comes after over a year of litigation, discovery, and motion practice, both sides have

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had ample opportunity to carefully assess and weigh the relative strengths and weaknesses of

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their legal positions. The discounted settlement amount seems to reflect those considerations.

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2.

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The proposed settlement agreement defines the class using the same definition set forth

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in the class certification order (compare Dkt. No. 73 at 12 with Dkt. No. 134-1 ¶ 3). Moreover,

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counsel confirmed during oral argument that the proposed settlement agreement releases only

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the certified class claim, despite including the language “any and all claims that were asserted

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or could have been asserted in the Litigation” relating to the October 11, 2016 facsimile (see

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Dkt. No. 134-1 ¶ 15). The proposed settlement agreement does not release any claims based on

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faxes sent on other dates (ibid.). The scope of class definition and release in the proposed

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settlement agreement is appropriately tailored and thus falls within the range of possible

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approval.

SCOPE OF THE RELEASE.

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ATTORNEY’S FEES AND INCENTIVE AWARD.

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Plaintiff’s motion indicates that “Class Counsel will request that the Court approve

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Plaintiff’s request for attorneys’ fees equal to 30% of the Settlement Fund, or $1,959,975.00,

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plus reasonable expenses” (Dkt. No. 131 at 10). In addition, “Class Counsel will also request”

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an incentive award “to Plaintiff in the amount of $7,500.00 from the Settlement Fund for

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serving as the class representative” (id. at 15). While the prospect of these forthcoming

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requests does not prevent preliminary approval at this stage, the parties are advised that the

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requested amounts are subject to close scrutiny and potential reduction at the final approval

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stage.
In particular, and as cautioned in the Court’s Notice Regarding Facts to be Evaluated for

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For the Northern District of California

United States District Court

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Any Proposed Class Settlement, the request for an incentive award to the lead plaintiff is a “red

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flag” (Dkt. No. 25). Plaintiff’s requested $7,500 incentive award “amounts to less than $0.50

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from each of the 15,276 class members” (Dkt. No. 131 at 16). The proposed settlement

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agreement, however, states that the requested amount “will be set by the Court” and that “[t]he

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parties have not agreed on any such amounts” (Dkt. No. 134-1 ¶ 11). While helpful that the

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settlement agreement is not conditioned on a specific incentive award amount, it does not

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automatically eliminate the risk that the proposed award might make a flawed or inadequate

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settlement more “palatable” to the lead plaintiff (Dkt. No. 25). Nonetheless, because the

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proposed settlement agreement does not provide for an automatic incentive award, no request

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for such an award has been made yet, and the settlement agreement is not contingent on the

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outcome of any such request, preliminary approval remains appropriate.
OTHER CONSIDERATIONS.

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4.

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Another factor weighing in favor of preliminary approval is that the proposed settlement

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agreement came about as a result of extensive mediation efforts supervised by Magistrate Judge

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Jacqueline Corley, including two in-person settlement conferences and subsequent deliberations

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(Dkt. No. 131 at 3). This background is not dispositive of but nevertheless relevant to the

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question of whether this proposed settlement agreement appears to be “the product of serious,

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informed, non-collusive negotiations.” See In re Tableware, 484 F. Supp. 2d at 1079.
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CONCLUSION
Subject to the foregoing, plaintiff’s unopposed motion for preliminary approval of the

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class action settlement is GRANTED. Class-settlement.com is hereby APPOINTED as settlement

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administrator. The Court will retain jurisdiction over the litigation and the parties until

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DECEMBER 31, 2019.

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By JUNE 6 AT NOON, counsel shall resubmit the proposed notice for Court approval with

conspicuously, the estimated amount of attorney’s fees, expenses, and incentive award class

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counsel expect to request. The estimated amount must be expressed as both a percentage and

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For the Northern District of California

the following modifications. First, the proposed notice must include, plainly and

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United States District Court

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dollar amount. Second, in addition to making clear how the requested attorney’s fees, expenses,

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incentive award, and administration costs will impact the settlement fund, the notice must

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provide clear estimates (also expressed in dollar amounts) of the net amounts that will be

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ultimately distributed to class members. All of the foregoing must be explained in plain English

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in the notice. The notice should also state in Spanish that a Spanish-language version of the

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notice is available at class counsel’s website. Both sides shall agree on the form of translation.

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If counsel submits a revised version of the proposed notice with the foregoing revisions

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by May 31 at 5:00 p.m., then the undersigned judge will try to respond by the following day. In

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all events, counsel shall submit, along with the proposed notice, a revised proposed timeline for

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administering the settlement that takes into account the delay in obtaining Court approval for

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said notice.

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The final pretrial conference and trial dates, as well as other pending deadlines in this
action, are hereby VACATED and will be reset if final approval is not granted.

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IT IS SO ORDERED.

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Dated: May 30, 2018.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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